China has deepened economic ties with Iran, boosting direct sales of petrol to the Islamic republic as the Chinese government negotiates new sanctions at the UN security council, it has emerged.

Iran announced today at the UN discussions in New York that it has produced five kilograms of 20% enriched uranium, defying security council demands to stop enrichment. Iran says it needs the enriched uranium to make medically useful isotopes, but western governments fear the achievement will enable Tehran to develop the capacity to make weapons-grade fuel.

General James Cartwright, the vice chairman of the US joint chiefs of staff, said yesterday that Iran could build a bomb in a year, although it would probably take three to five years.

China has argued that the issue is not as urgent as Washington claims, and that there is still time for diplomacy.

A Chinese state oil company has sent two recent shipments of petrol to Iran, according to Reuters news agency. The sale by Chinaoil was the first by a Chinese company since January 2009 of refined oil products to Iran directly, rather than through intermediaries. Another Chinese company, Sinopec, is about to sell petrol to Iran for the first time in six years, filling a gap left by European and Russian firms that left the Iranian market amid fears of punitive action by Washington.

Iran-China trade has more than doubled to about $30 billion (£19.38m) over the past decade, fuelling Chinese reluctance to agree to sanctions against Tehran over its nuclear programme.

Beijing has agreed to discuss a possible sanctions resolution, but has insisted — with Moscow — that any measures are confined to Iran's nuclear sector, and do not cause wider economic damage.

The five permanent members of the security council — the US, China, Russia, Britain and France — discussed draft sanctions yesterday with Germany, which has also played a leading role in negotiations with Tehran.

Another senior US official, William Burns, said that it would be "very difficult" to convince China and Russia to agree to a ban on refined fuel sales.

The US draft sanctions resolution includes a full arms embargo, more restrictions on Iranian banks, curbs on international shipping insurance for Iranian freight, asset freezing and travel restrictions on members of the Iranian Revolutionary Guard, and a ban on new investments in Iran's oil and gas industry. China is currently opposing the ban on energy investments.

"The Chinese are obviously concerned about what ramifications this might have on the economy," President Obama said yesterday after talks with the Chinese president, Hu Jintao. He is hopeful that an agreement can be reached "within weeks".